1999 (3) TMI 568 - AT - Central Excise

Summary

Issues:
1. Determination of the date for change of annual capacity under Hot re-rolling Annual Capacity Determination Rules, 1997.

Analysis:
The appeal before the Appellate Tribunal CEGAT, Mumbai involved the question of determining the date from which the change of the annual capacity of the hot rolling mills of the appellant should be considered under the Hot re-rolling Annual Capacity Determination Rules, 1997. The rules required manufacturers to intimate any proposed changes in machinery that could affect capacity to the Commissioner and obtain written approval before making the change. The Commissioner would then determine the effective date of the capacity change. Additionally, if the determined annual capacity was less than the actual production in a specific year, it would be deemed as the actual production for that year. The rules were essential to implement Notification 31/97, which specified the duty payable on certain hot rolled products based on production capacity. Section 3(a) of the Act empowered the Government to specify goods for duty determination based on factors such as annual production capacity.

The appellant had requested a change in the nominal centre distance of the parameter rollers in August 1997, but faced delays in obtaining approval from the Commissioner. Despite repeated communications, the Commissioner only ordered the capacity change after a team of experts verified it on 29th December 1997. The appellant argued that the change should be effective from 8th November 1997, the date they proposed the change, as they had complied with the rules and should not be penalized for delays caused by the Commissioner's office. On the other hand, the Departmental Representative contended that no change could occur without the Commissioner's permission and expert verification.

The Tribunal observed that the rules required the Commissioner to promptly act on change requests, with the expectation that necessary verifications and approvals would be completed within a month of the request. In this case, the appellant's letters did not receive timely responses, indicating a lack of action from the Commissioner's office. While the change could not be solely based on the team of experts' verification date, the Tribunal found the appellant's claim of a change on 8th November 1997 unsubstantiated. However, a communication between the appellant and the Superintendent confirmed a change on 24th November 1997, leading the Tribunal to accept this date as the effective change date.

Consequently, the Tribunal allowed the appeal, setting aside the previous order. The Commissioner was directed to determine the duty payable based on the revised capacity and inform the appellant accordingly.